In this panel discussion Fintan Walton looks at the emerging Asian markets and asks his guests what opportunities they see for different sectors of the industry in this arena. Sandy Macrae, Senior Vice President for GSK's Asia Pacific Japan and Emerging Markets R&D, Ken Macleod, Partner at Paul Capital Healthcare and Bill Guo, Chairman of Venturepharm give their views on this topic following their diverse experiences of the rising Asian biopharma industry.

Hello and welcome to PharmaVentures business review here at BIO in Atlanta. On this show I have Sandy Macrae, Senior Vice President, Asia Pacific Japan and Emerging Markets Research and Development. I have Ken Macleod, who is a partner at Paul Capital Partners in London.

Ken Macleod:

Thank you Fintan.

Fintan Walton:

And I have Bill Guo, who is the CEO of a company called Venturepharm based in Beijing in China. Welcome to the show. So today we were gonna be talking a little bit about the Emerging markets and is it good for pharma or biotech companies. So I want to turn to you Sandy first of all, GSK you head up a specific group within GSK that focuses on the Emerging Markets in particular the Asian markets you can tell the audience even more specifically about what that goal is but what's clear is that GSK has adopted a new strategy for its position within Emerging Markets, can you just describe that first of all?

Sandy Macrae:

Thank you. GSK thinks the Emerging Markets are clearly very important if you think that China would be the third biggest country in the Emerging Markets by 2012 in the second by 2015 and so we realized that we need to embrace this and find up a portfolio of strategies to be able to bring medicines to these markets. So for that reason we are focusing on vaccines on our branded generics portfolio and on our IP protected medicines. And to help with that we've set up an R&D group which I am looking up to lead which will both look for business development opportunities to bring other peoples medicines into these markets and also a clinical development resource so uniquely we are able to do both business development and clinical development for Asia Pacific and in Emerging Markets.

Fintan Walton:

So basically the basis of that is that you recognize the Emerging Markets as different obviously to the more developed markets and therefore GSK is adapting its growth strategy for those areas specifically?

Sandy Macrae:

Yeah, yeah absolutely right. They are different, each of the markets is very different and you need to group this focused on them and understand each of the countries and their own particular registration in clinical development needs.

Fintan Walton:

So where does innovation set in relation to all of this?

Sandy Macrae:

So innovation is both in the diseases that are particular for those countries, so I am thinking here of Hepatitis B or Hepatocellular Carcinoma, but I think there is also innovation in bringing clinical development to conditions that are recognizing the west, I am thinking of COPD or cardiovascular disease where previously we haven't considered developing those drugs for China and India and what we hope to do is to be able to bring those medicines to what really is a big patient need in these markets.

Fintan Walton:

But on the back of that GSK is actual going out there and acquiring products from other companies, you recently brought a product line from [PharmaDeals ID = 33580]Bristol-Myers Squibb and you've also brought product lines from UCB [PharmaDeals ID = 32269] in Belgium. Is this part of the same strategy?

Sandy Macrae:

Absolutely. So we've reckoned to be able to be successful in these diverse market we need to be able to offer branded generic compounds for those for whom that's important, IP protected compounds and vaccines each of which brings something different and in the various health economics and health structures in these countries they are different and important in different countries.

Okay. So if I could turn to you Ken, you're from Paul Capital Partners where a company that's involved in financing pharmaceutical and biotech companies largely on revenue streams, largely on royalties and so forth the monetization of that, so and yours one of your areas is the Emerging Markets?

Ken Macleod:

Yeah.

Fintan Walton:

And so, yeah I know you are about to go out to India to do some deals there and so forth. So how does an organization like yours fit into these Emerging Markets and how can you really assist in that sense?

Ken Macleod:

Yeah if you look at it, we probably put the Emerging Markets into four different buckets as far as we see opportunities. I think when we first looked at the Emerging Markets our intention was to work with companies who had an existing revenue stream may be selling generics or branded generics in their home markets and we are seeking to expand into sort of the developed markets of the Europe and the US and so very much about funding entry strategies into those market. And I think now we've also recognized that the Emerging Markets in themselves are an important market. And I think that just goes back to GSK's acquisition of those brands from UCB and the like. But there are companies in Asia that have looking to expand their scope beyond maybe their own locality into other countries in the Emerging Market so that becomes the second bucket which is potentially for investing. Now the other two areas in fact slightly less likely for us to fund which is the situation where you've got the biotech type company where again they fall into two into these two bucket. One is much more of a contract research or a service based business. And then the second is - and the fourth of these four buckets is the pure biotech's of which they are obviously much smaller numbers and are often a lot of that early stage biotech is in fact being done by the branded and the branded generic companies anyway. So we can help where there is a revenue stream and certainly in two of those cases that is the situation what we found.

Fintan Walton:

So the biotech model for a Emerging Markets would be different to the biotech model that you would normally find in developed markets like the US or Europe?

Ken Macleod:

I think it is different. I think one difference is access to capital, there isn't the same access to capital which means that there can be lots of start-ups. There isn't the university, they are very strong universities, but what there isn't strength in biology there which is that what generates the spin outs of the biotechnology companies. So I think there is the lack of the spin out opportunity and there is a lack of the financing is one of the reasons why it's different. And there is a consequence I think what has happened is that the R&D is now being done inside some of the very successful companies which really started up with generic manufacturers and you can see that in Dr. Reddy's, Glenmark [PharmaDeals ID = 24431] the company obviously we have deal with you've seen them do the same. So I think it is going to be slightly different.

Right. So if I turn to you Bill Guo, you are the CEO of an entrepreneur setup Venturepharm which is based in Beijing in China. You are in China which is one of the fastest growing Emerging Markets right now. Your company focuses on providing a service largely to both indigenous pharmaceutical companies but also pharma companies and biotech companies outside, so how would you describe your market, the China market and the opportunity?

Bill Guo:

Certainly China becomes one of the hot spot in the world that a so many elements move there and there is so much attention moving there. I think the main reason for driving for that is attention is that one China becoming one of the largest of market, so people having the go there to do their research, because the pharmaceuticals is a heavy laboratory industry. So whatever data you generate there so we are certainly competitive to register your drug there, so the one and it's drive by the market. The second is affordable innovation, yeah so company that have looking for alternatively way right now one drug could be like too bigger high so people have to find that new way alternatively way how to become affordable innovation affordable. So China you see they have greater talent pool and there is also big market and there is also all kind of a reason, so people decide do move their research to go there, yeah even like you just said adding (indiscernable) from the GSK through the all the research there a lot of decision making when you move to there.

Fintan Walton:

You are right.

Bill Guo:

Yeah, so they've launching older bigger pharma there and looking for what's as a new engine to drive with GSK and to drive a large margin of the company that created the growth there if I know that that's a big market, that's also can do research affordable. And the third reason is that the Chinese Government they have tried to transfer China to be a innovation country, so they have invested huge amount of the money to fasten and incubate all those R&D.

Fintan Walton:

Right.

Bill Guo:

So that is a how we prospected the current new China market.

Fintan Walton:

Okay. So but clearly one of the the things is that is an Emerging Market and a market we are talking about was the selling drugs?

Bill Guo:

Right.

Fintan Walton:

And as you say those drugs that are gonna be developed within China also China has its own regulatory�.

Bill Guo:

Right.

Fintan Walton:

And outside pharmaceutical companies have to take their drugs through the Chinese regulatory the board of those, so in the end how would you segment those three elements one the market the debit of research and development in the orbit, where is the most activity happening right now is that activity really largely driven my market and the deep part of research and development?

Bill Guo:

Yeah, that the current scene is very interesting, you can see lot of a company that moved their R part to China before there highly (indiscernable) go there to only do the D part for registration reason for all kind of reason. But now more and more people move to China is big they relocated their basic research to China to do the research there. So that is you can see because you in the meanwhile you can see the Chinese regulation yeah, the authority the SFDA also like improved they are like a regulatory system to move on and more close to the FDA.

Okay. So that brings it back to you Sandy, because as Bill already mentioned that GSK has set up a research and development center so tell us a little bit about that and why GSK has done that?

Sandy Macrae:

Well I think the cost is a benefit, but the reason we choose to go to Shanghai particular for a newest generation and new inflammation centre was the quality of the science, both the quality of people from Chinese universities who were looking to work in our institute, but also the number of returnees from the US and from Europe who were very eager to come back and live and work in China. And so we have a group there that currently is focusing on the research part, but our aim is to grow this into an institute that will take drugs all the way from discovery to development and registration and not just for China, this will be our centre for global development for newest generation.

Fintan Walton:

Right. And so, you are actually look at drug discovery actually happening there so that means that the whole procedures of intellectual property rights and so forth will emerge from these particular?

Sandy Macrae:

Yes absolutely, absolutely.

Fintan Walton:

These particular research institutes. Okay.

Bill Guo

Chairman and founder of Venturepharm Group

Dr Sandy Macrae is Senior Vice President for GSK's Asia Pacific Japan and Emerging Markets R&D, a team that seeks and develops medicines for those markets. He trained in medicine and pharmacology at Glasgow University and then specialized in endocrinology at the Royal Postgraduate Medical School, Hammersmith Hospital, London. He has a PhD in genomics from King's College Cambridge and completed his post doctoral research work at Duke University, USA. Sandy first joined SmithKline Beecham(now GlaxoSmithKline) in Neurosciences in 1997. Since then he has held a number of positions including Vice President for Scientific Licensing in Worldwide Business Development, Vice President in Clinical Development for Musculoskeletal, Inflammation, Gastroenterology and Inflammation, and Vice President for Infectious Diseases which included leading their Diseases of the Developing World clinical group.
Ken Macleod, Ph.D. joined Paul Capital Partners in 2004 and is responsible for sourcing, evaluating and negotiating European and Asian investment opportunities for Paul Capital Healthcare. Based in London, Dr. Macleod previously held senior management positions over a 15-year career at Serono, Abbott Laboratories, and Beecham Pharmaceuticals. Prior to joining Paul Capital Partners, Dr. Macleod was a Venture Partner at Schroder Ventures Life Sciences where he was responsible for deal sourcing, evaluation, and negotiation of pharmaceutical investment opportunities. Dr. Macleod earned his Ph.D. from the University of York, UK and his B.Sc. with honors in Biology from the University of Manchester, UK.
Bill Guo is the Chairman and founder of Venturepharm Group, a leading full service provider to world life science industry. Venturepharm Group now has two public companies, Venturepharm Lab, the first China CRO listed in Hong Kong and CBI, the first Chinese CRO's acquisition of a US CRO in NASDAQ. Having obtained the medical degree in China, Bill went to Canada to pursue his MSc and PhD studies in pharmacokinetics and physical \pharmaceuticals at the University of Toronto, and obtained MBA from Herriot Watt University and Executive Education from Judge Business School, University of CambridgeUK. Fortune magazine recognized him as one of the most promising entrepreneurs in China. A list of his awards includes 2005 National Hero by the State Council of China; One of the Ten Best Management Elites in China (2004); one of the ten most influential individuals in economic field of China (2005); Sole winner of Youth Chinese Entrepreneur Award by Asia Business Week (2003); 2005 Entrepreneurs and Innovation by British Chamber of Commerce.

GlaxoSmithKline

GlaxoSmithKline Plc is a United Kingdom based pharmaceutical, biological, and healthcare company. It is the world's second largest pharmaceutical company and a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system, respiratory, gastro-intestinal/metabolic, oncology, and vaccines products. It also has a Consumer Healthcare operation comprising leading oral healthcare products, nutritional drinks, and over the counter medicines. GSK was formed in 2001 by the merger of GlaxoWellcome (formed from the mergers of Burroughs Wellcome & Company and Glaxo Laboratories), and SmithKline Beecham (from Beecham, and SmithKline Beckman).
Paul Capital PartnersPaul Capital Partners established Paul Capital Healthcare in 1999 to meet the financing needs of healthcare companies, institutions and inventors. Today, the firm manages one of the largest dedicated healthcare funds globally with a total of $1.4 billion in assets under management. The Fund focuses on commercial stage healthcare products and investment opportunities in North America, Europe, and Asia. To date Paul Capital Healthcare has closed more than 30 investments in the pharmaceutical, biotechnology, medical device, and diagnostics areas. Public and private companies, research institutions and universities, and individual inventors have all benefited from the flexibility of Paul Capital Healthcare's investment approach. This capital has enabled them to transfer product risk, finance clinical and commercial development projects, acquire new products, fund university programs and capital needs, avoid conflicts of interest, unlock shareholder value, and monetize product royalties.
Venturepharm GroupVenturepharm Asia is a global life science leader with a strategic focus on venture capital, merchant banking, CRO, CMO, CSO, compound partnering, and royalty sharing. The group develops an innovative full service plus model to position itself strongly in the life science industry. Currently Venturepharm Asia has more than two thousand employees. Venturepharm is the largest global provider of pharmaceutical development service in China. Venturepharm provides full service of drug discovery and development that take new drugs from "Idea to patients". These include API (Active Pharmaceutical Ingredient), formulation development, clinical trial, product registration, marketing & sales to pharmaceutical distributors and patients in China and overseas. Listed as a Hong Kong public company (8225), Venturepharm (China) has experienced dramatic success since its inception in 1999. Powered with 7 of Smart technology platforms, it has over 400 non-patent infringed products approved, or pending. In addition, 6 of NCEs (new chemical entities) are at preclinical stage. These products encompass over 13 major therapeutic areas. In 2004, Venturepharm was valued by FORTUNE magazine as one of the five most promising companies in China. Since 2000, Venturepharm has achieved revenue CAGR of 133% and EPS CAGR of 383% annually.